‘Upstart Business’ is a phrase that seems to be creeping into the journalistic language used on tech and entrepreneurial blogs in the US. The first time I heard it I thought the writer was simply playing with the normal term ‘startup’ to be witty and focus on a particularly ballsy and inspiring effort of a young entrepreneur. Then a week or two later I read it again elsewhere. This got me thinking: Was ‘upstart’ just a meme that one clever writer used once and then suddenly caught on with the blogging fraternity or is it now a well known and accepted term? More to the point does its origin matter and is it more important to ask which is better?
Googling the term, you get a myriad of results. Many are for business or consultancy related groups and services that use the ‘upstart’ interchangeably with ‘startup’.
The online dictionary definitions which appear are all similar to this one:
n. A person of humble origin who attains sudden wealth, power, or importance, especially one made immodest or presumptuous by the change; a parvenu.
adj. 1. Suddenly raised to a position of consequence.
2. Self-important; presumptuous.
Reading between the lines in the tech blogs it appears that the difference is this; ‘Startups’ are entrepreneurial businesses that begin with external funding from venture capital from their inception. However, ‘Upstart’ businesses begin without significant external funding, just savings and personal loans from friends and family and usually the founders maintain all equity. This is in keeping with the upstart definition, springing from humble origins to wealth, rather than having lots of cash to play with before you have a customer.
A Big Upstart
Felix Dennis, Author of How to Get Rich (Image: BBC)
Felix Dennis, author of the refreshingly direct, ‘How to Get Rich’, is very much in the upstart mould and believes a business owner should do everything in their power to hold on to the most equity possible. Each percentage of equity you manage to own, could be worth millions when you eventually sell your business. In one chapter he describes how two important employees at his magazine demanded a small share of the business or they’d start a rival publication.
He instantly called their bluff, fired them and wished them well in their new venture. Within a few years their business was bust and they were back working for him, no hard feelings. When he sold up and moved on, that tiny percentage they had demanded was worth millions; his baby, his millions. Dennis put it in uncompromising terms:
Talent is indispensable, although it is always replaceable.
Just remember the simple rules concerning talent:
Identify It, Hire It, Nurture It, Reward It, Protect It. And when the time comes, Fire It.